The Rutgers athletic department was allowed to become a virtually independent operation within the school - bending rules, answering to no one and spending freely.

Those findings were contained in a much anticipated report released late Wednesday by the university. The 35-page internal review said the athletic department veered out of control because Rutgers president Richard L. McCormick and the school's board of governors failed to monitor Athletic Director Robert E. Mulcahy in the drive to bring athletic success to Rutgers.

The overall conclusion from a panel of business leaders, judges, lawyers and Rutgers officials was that the state university was ill-prepared to handle its push into big-time football.

"The university operated with inadequate internal controls, insufficient inter-departmental...communications, an uninformed board on some specific important issues and limited presidential leadership," the report said.

The report found no wrongdoing on Mulcahy's part.

According to the report, head football coach Greg Schiano signed four multimillion-dollar employment agreements with Mulcahy, but none was discussed or reviewed by the board of governors. It also said Mulcahy was given broad authority intended to boost the athletics program. But, the report said, no one was watching over his shoulder and McCormick and the board of governors failed to exercise their authority.

"This was a critical deficiency because as we have witnessed ... the athletics director pursued his charge with vigor but also in an increasingly insulated and ultimately counterproductive manner," the report said. "Neither the board nor its committees applied the level of questioning scrutiny to Department of Intercollegiate Athletics matters that it had applied to other departments in the university."

In a statement that accompanied the report, McCormick pledged to improve "the way we do business at the university."

Rutgers, he said, would take additional steps to "manage effectively an increasingly successful and fiscally complex athletics program." Among those actions, McCormick said, will be additional administrative oversight of the athletics department, expanding the size and responsibilities of the university's internal audit department, requiring employment contracts of all coaches include all elements of compensation, as well as his own approval for those compensation packages.

Mulcahy, who did not respond to calls for response, said in a statement he will work closely with McCormick and the board to implement the recommendations.

The committee was chaired by Al Koeppe, chief executive officer of the Newark Alliance and former CEO of Public Service Electric & Gas Co., and Al Gamper, former chairman of the Rutgers board of governors. Their nine-member review committee was created by McCormick in August in the wake of a series of stories in The Star-Ledger that looked into the school's athletics department and specifically its football program.

The Scarlet Knights, who started this season 1-5, have won their last four games and are looking at the possibility of a post-season bowl. The team has gone to three bowl games in the last three years - winning two - while Rutgers Stadium in Piscataway is sold out through the season.

But that success has not come cheap. In a series of stories, the newspaper documented hundreds of thousands of dollars in off-the-books spending that never appeared within the Rutgers budget, undisclosed contract sweeteners given to Schiano and a no-bid deal with a sports marketing group that was retained after it put Mulcahy's son on its payroll.

Rutgers, in the midst of a $102-million expansion of its football stadium, remains under a separate ongoing probe by the state comptroller, which has sought extensive records on the stadium construction and other information.

Much of the report cited The Star-Ledger stories, including the contract with Schiano and the agreement with Nelligan Sports Marketing, which handles some $4 million in sponsorship revenues for Rutgers.

In July, for example, the newspaper reported that five months after agreeing to terms that will pay him as much as $2 million a year, Schiano signed a side agreement providing an additional $250,000 a year through indirect, guaranteed payments arranged by Nelligan. Until last year, those payments had been made through Rutgers' payroll accounts and the funding source was openly disclosed. A contract extension in February 2007 included no such terms, even as his compensation substantially increased. Rutgers never revealed the new contract sweetener.

A separate side letter with Schiano gave him an escape clause to walk away from his contract without penalty if the stadium expansion was not completed.

After that story, Mulcahy said the buyout clause was discussed but never executed. However, the review committee said Mulcahy had signed the contract amendment, and had told McCormick it had been signed. McCormick had assumed the buyout was contractually binding when later asked about it by The Star-Ledger. Only after reporters questioned the deal did McCormick learn Schiano had not signed the document, the report said.

Mulcahy, who was vested with the entire responsibility for the $47.9 million athletics budget, informed the board of governors a week after the letter of intent with Nelligan was signed. The university's general counsel also was unaware of the letter of intent until after it had been signed.

The report also found there was no formal notice by Mulcahy of his son's employment with Nelligan. It said there was "no basis to conclude Mr. Mulcahy acted in a way that he knew to be improper or not in the best interests of the university." Still, the panel said there was the appearance of a possible conflict and that Mulcahy should have disclosed his son's employment.

McCormick said the report acknowledges the changing culture of a rapidly developing NCAA Division I football program that has placed additional stress on the system at Rutgers, and noted the report identified no illegal or unethical activities at Rutgers, nor did it raise concerns about the outcomes of decisions that were made by the university.

"Any institution that aspires to achieve even greater accomplishments and to realize the highest ideals should periodically take stock of what it has done and ask how it can do better," McCormick said. "The thorough analyses, candid reporting and thoughtful recommendations generated by the members of the Athletics Review Committee in their nearly four months of work will lead to constructive change at Rutgers. The university is more committed than ever to the values of accountability, transparency, and rigorous adherence to established procedures for decision-making. Our students, faculty, staff, alumni, supporters and the citizens of New Jersey expect and deserve no less."

In the university's response, the Rev. M. William Howard Jr., chair of the Rutgers Board of Governors, said the board looked forward to working on addressing the issues raised in the report.